Closing thoughts on Trump vs. Musk

This exchange with Andrew Gelman in the comment section for Friday's post is already pretty much a post. After seeing my reply, Andrew directed me to his post from earlier this year which discusses a similar dynamic. 

“They had it all but they wanted more”: Left-wing radicals in the 1960s and right-wingers now 

From Friday:

I'm not saying that Trump and Musk don't have real disagreements, but . . . is part of this just straight-up game theory, kind of like what happens when labor and management attack each other when there are contract negotiations? Strikes, lockouts, and lawsuits are not good for business--they're negative-sum actions--but sometimes the union needs to strike, management needs to lock out, and both sides need to sue, just to demonstrate their seriousness. Basic negotiation strategies.

So, Musk can unleash the social-media attacks, not because it helps him but because it demonstrates his willingness to do so, which brings Trump to the negotiating table, and then Musk can walk it all back.

Another part of this is Musk's apparent confidence that, between he and his allies, and Trump and his allies, they control the news media discourse to the extent that if Musk says X, Y, and Z, and then he later unsays them, the original saying-of-it will be politically unimportant.

I'm not saying that this behavior is entirely strategic or that Trump and Musk don't have anger issues, just that this conflict fits in just fine into a negotiation pattern. Maybe Musk really felt the need to escalate to be taken seriously. And, as is often the case, emotional and rational behavior can go together; indeed, rational strategies can be most effective when they align with emotions.

Andrew 

 _______________

Andrew, 

It's true that these steps are entirely consistent with, and might be highly effective as, negotiating strategies. The problem is, there's no negotiation here. Unless we are talking about some sort of incredibly convoluted, 11th-dimensional chess where there's no way of knowing what the true objectives are, Musk had nothing to gain and virtually everything to lose by going rogue.

Musk was already getting about as much preferential treatment as the Trump administration could manage. They were throwing him government contracts and strong-arming other countries to adopt Starlink. They were killing investigations into his companies and letting him shut down regulatory departments that were supposed to keep him in line. The promise of even bigger graft to come had pumped his companies’ market cap above the trillion-dollar mark.

The only thing they hadn't given him was the continued EV subsidies, but he had to know those were going away—and even if he didn't, by focusing on the spending in the budget, he made it next to impossible to push for even more spending on electric vehicles. He even went so far as to explicitly rule out asking for them as part of his flame war.

Musk did have complaints, probably about the way he was shown the door (though even there, he absolutely had to leave in order to convince stockholders and investors he was focused on his companies). He didn't want to stay, but he might have felt upset over being encouraged to leave.

The key concept here is insult versus injury. Virtually nothing Trump and the administration had done had hurt Musk professionally or financially, but a great deal had been done to hurt his feelings—from passing over his guy for NASA to that humiliating exposé in The New York Times. You can't negotiate away insults. All you can do is get even.

As for the ability to make statements X, Y, and Z go away, some bells are very difficult to unring. Trump is currently trying to pass arguably the most unpopular budget in living memory. This is already a heavy lift, and having Musk attack it from the right does not make it any easier. Should this legislation fail, it would be an extraordinary blow, the ramifications of which would echo for a long time.

Though not of the same magnitude, bringing up Epstein and priming his followers to expect an economic downturn due to tariffs are two more genies that will be difficult to get back in their bottles. (It's worth noting that Musk has continued to double down on the Epstein thread.)

It is essential to remember that while Musk is, by most standards, the richest man in the world, that position is extremely precarious. Unlike Bezos or Gates or Buffett or any of the other men in the top five or ten, Elon’s fortune is almost entirely based on a bubble—the belief that companies, both over 20 years old, will, sometime in the near future, suddenly become massively profitable. If Tesla and SpaceX were valued based on even the most generous rational criteria, Musk's net worth would drop by a factor of at least 20 or 30. Balloon men, as a rule, should avoid knife fights—but that's exactly what Musk is engaged in.

(I'll probably rework this into a post next week.)

Mark

ps One other point I should have emphasized was just how insanely self-destructive the choice of targets was on Elon's part. Supposedly, this all started over excessive government spending, which is a strange place to plant your flag if your entire fortune is dependent on government money. At one point, in the heat of the exchange, Musk even basically came out and said, "I don't want your stupid old subsidies."

Now, as we enter the hangover stage of this whole ugly but amusing affair, Musk appears to have remembered—or been reminded—that he does, in fact, want those stupid old subsidies; that it was those taxpayer-funded checks that finally tipped Tesla into profitability and have barely kept it there.

As Patrick Boyle recently put it. "If you take the crony out of crony capitalism, what's the point?"

As of Monday, Musk appears to have entirely and unilaterally backed down.

A few days ago, Musk called for Trump to be impeached and suggested he was involved in pedophilia. Then Trump threatened to terminate Musk's federal contracts. Now Musk is back to promoting Trump.

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— Judd Legum (@juddlegum.bsky.social) June 9, 2025 at 7:53 AM

Musk has deleted his tweet accusing Trump of being in the Epstein files: x.com/elonmusk/sta... He also deleted a follow-up that said "Mark this post for the future. The truth will come out."

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— Matt Novak (@paleofuture.bsky.social) June 7, 2025 at 8:20 AM

Exclusive: Officials at NASA and the Pentagon are urging SpaceX competitors to quickly develop alternative rockets and spacecraft after President Trump threatened to cancel Space X’s contracts and Elon Musk’s defiant response.

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— The Washington Post (@washingtonpost.com) June 7, 2025 at 10:27 AM

The Washington Post has a good post mortem. 

WASH POST: Trump called Musk “a big time drug addict” — and Musk and Bessent came to blows after Bessent called Musk a fraud. A damn circus. 🎪 www.washingtonpost.com/politics/202...

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— The Tennessee Holler (@thetnholler.bsky.social) June 7, 2025 at 9:50 AM

 

And just a reminder.

“About a third of Tesla’s $35 billion in profits since 2014 has come from selling federal and state regulatory credits to other automakers.” www.washingtonpost.com/opinions/202...

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— Max Boot (@maxboot.bsky.social) June 8, 2025 at 5:57 AM